The Finances of Home Buying: The Downpayment and The Mortgage Step 4: Obtain Financing Determine down payment amount –Large (> 20%) downpayment makes the process easier Mortgage insurance if < 20% down (PMI) Automatic PMI termination when equity =>22% –Required by Homeowners Protection Act Feature of a mortgage: LEVERAGE (using other people's money; magnifies a home's gain or loss) Objective 3 Determine Costs Associated with Purchasing a Home 7-14
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